CLEAN up your act or get out — that’s the message China’s securities regulator is sending to listed companies.

The delivery of that message wasn’t subtle. On May 17, the regulator ejected four firms that fell short of exchange requirements from the market. That might not seem like many, but it matched China’s record for the most A shares delisted in a year since at least 2010. The moves by the Shanghai and Shenzhen stock exchanges came a week after Yi Huiman, chairman of the China Securities Regulatory Commission, said “zombie” companies wouldn’t be allowed in the stock market anymore.

Weeding out troubled companies has become a pressing issue for officials as they prepare to launch a tech-focused board as soon as June. It signals regulators are seeking a better system for getting rid of any potential misses if that board is to be successful in the long term.

“The recent delistings and remarks from the top regulator have sent a clear signal that it is determined to speed up the removal of weak companies as it launches the tech board,” said Fu Lichun, an analyst at Northeast Securities Co.

“So we are going to see more and more of this, and it will become more and more common.”

The housecleaning involved Hareon Solar Technology Co., which the Shanghai exchange said had problems in its financials, and Shanghai Potevio Co., which posted three straight years of losses. Two Shenzhen-listed companies, Chengdu Huaze Cobalt & Nickel Material Co. and Zhonghe Co., were ousted for similar reasons.

Another nine stocks have been suspended by exchanges this year for similar violations, signaling the pace of delisting will accelerate. Suspension means the troubled firms are on the brink of removal and cannot resume trading unless they meet certain requirements.

China’s plans to launch its Science and Technology Innovation Board in Shanghai is not only intended as a way for tech firms to raise funding but also as a driver of reforms aimed at fixing problems that have plagued China equities market.

The more problematic issues are instances of financial wrongdoing: a recent example involving a well-known company has made investors more nervy.

“Financial fraud of listed firms has created a very bad atmosphere in the A-share market, making bad money drive out the good,” said Yang Hai, an analyst at Kaiyuan Securities Co. “That trend must be reversed.” (SD-Agencies)